asked the Minister for the Environment if he has satisfied himself with the present proportion of building society funds invested in housing finance, and if he will make a statement on the matter.

7.

asked the Minister for the Environment if he has satisfied himself that the building societies are making house loans available to the maximum amount permissible of their deposits and not placing depositors' funds on short-term deposit with other financial institutions instead of being allocated to loan applicants.

With the permission of the Ceann Comhairle, I propose to take Questions Nos. 6 and 7 together.

The Quarterly Bulletin issued by the Central Bank in August 1979 indicated that the value of building society mortgage loans had fallen from 77 per cent of total assets in June 1978 to 68 per cent in June 1979. The value of liquid assets, including cash and investments, had on the other hand increased from 21 per cent to 30 per cent of total assets over the same period. The reason for this decrease in mortgage assets and corresponding increase in liquid assets can be readily seen in the exceptionally high level of net inflow of funds to building societies during the last quarter of 1978 and the first half of 1979. In the first half of 1979, for instance, net inflow of funds was running at almost two-and-a-half times the level prevailing during the same period last year. The societies felt that if they had suddenly released those funds on the mortgage market too quickly it would have had an adverse effect on house prices. The societies decided to endeavour to spread funds out evenly over the whole year.

The situation prevailing in June this year is now changing. Net inflow of funds, although still high, has reverted to more normal levels, but societies are in a position to maintain loan approvals at a fairly high level as they draw down the liquidity built up at the beginning of the year.

Information supplied by the Registrar of Building Societies indicates that in 1976, 1977 and 1978 over 98 per cent of building society lending was devoted to housing loans.

In all the circumstances, therefore, I see no reason to be dissatisfied with building society lending policies.

Was the Minister consulted by the building societies in regard to the decision to regulate the flow of funds to the housing industry?

I, personally, or my Department?

The Minister is Minister for the Environment and I am asking if he was consulted in that capacity by the building societies as they, as an independent group, regulated the flow of finance to the housing market.

There are discussions regularly between the societies and my Department at official level.

Did the building societies come to the Minister and seek his approval, comment or any other response to the specific decision which he instanced in his formal reply that they would control the flow of funds into the housing market in the earlier part of this year?

I cannot say if I was consulted specifically on that issue, but there are regular discussions between the building societies and my Department.

Say "No" and tell the truth.

I cannot say "No"——

Am I to take it that the Minister for the Environment, who has powers under the 1975 Building Societies Act, is not even aware whether he was consulted or not by people who control over £800 million of the resources of Irish depositors?

I said that I cannot say whether I was consulted specifically on that, but there are regular discussions at official level with my Department on all matters concerning building societies.

I would assume that, but is the Minister saying that in no way was his Department involved in deciding the flow of funds to the housing sector?

I did not say that; but, subject to checking, I feel sure there was full discussion. I cannot say at this time if there was consultation on this specific issue. I added that there are discussions regularly with my Department on all matters concerning building societies.

In the brief provided with the answer is there any reference to this specific item where the percentage of building societies' resources for loans dropped from 78 per cent to 67 per cent? It is an enormous amount of money of which the housing market was deprived. There are builders with no work and construction workers unemployed as a result.

I gave the reasons for the drop.

Since it has now been established that the resources of the building societies devoted to house loans has dropped from 78 per cent to 68 per cent in the recent 12-month period, has the Minister further information on the investment policy of the building societies in that period? Is he satisfied that the decrease in the allocation of the resources of the societies to house loans is to his satisfaction?

Yes, I am satisfied, and in recent months the amount of money they have made available for house building has been greater than the deposits reaching them. This is one result of spacing out the heavy deposits they received early in the year.

Can the Minister indicate the other investments made by the building societies in that period?

No. The building societies get better returns from lending on housing than anything else.

Rubbish.

This is according to the building societies themselves. They issued a statement during the week which made it very clear that was happening.

They have contradicted themselves. Is the Minister aware that his statement here today justifies the comments made by the leader of this party that the building societies were not allocating their resources to house loans?

The building societies continue to allocate their resources——

They have reduced the percentage.

——to house loans and they have increased the amount of money they have allocated to houses. In recent months they are making allocations to housing which are larger than the deposits they are receiving. I think this is a reasonable policy.

(Cavan-Monaghan): Would the Minister agree that, in the light of what he has now said, the report appearing in the newspapers from the building societies is very misleading?

I have not read the report and so I cannot agree or disagree.

(Cavan-Monaghan): Let me ask the Minister one final question. Why are the building societies not providing the bridging finance that is so badly needed if they have all this surplus money?

I will answer that question in a few moments. It is dealt with in the next question.